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Iron Road ready to take on majors

Greg Roberts

South Australia's Iron Road could be accused of being brave, or worse, building a $US4.5 billion iron ore mine as the mineral's price falls.

For a junior magnetite iron ore miner with a market value of $162 million, to operate in Australia is also like a bull ant taking on an elephant, such is the clout of BHP Billiton, Rio Tinto and Fortescue Metals.

Those global companies are close to finishing massive expansion plans and already dominate global supply, along with Brazil's Vale.

The iron ore price hit eight-month lows this week, but Iron Road's managing director Andrew Stocks was upbeat about the planned Central Eyre iron project being in production and profitable by 2018.

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It has been declared a a major development by the South Australian government.

The company's $US100 million definitive feasibility study released last week found the project could support a 25-year mine, producing 21.5 million tonnes and an estimated $US2.8 billion in revenue a year, outstripping the state's entire wheat, beer or wine sales.

South Australia's economy needs projects such as this in the wake of BHP's cancellation of the $US30 billion expansion of the Olympic Dam mine - which the government had been banking on - and more recently Holden's closure announcement.

Iron Road says 2,000 workers would be needed for the mine's construction, 700 permanent employees would run it, and another 2,100 jobs would be indirectly created.

Iron ore prices are at $US116 a tonne and forecast to tumble further on softer Chinese demand, but Mr Stocks rejects the suggestion that his company is too late getting into the iron ore market, after the record prices of 2011.

Much of the predicted new iron ore supply around the world will not come on as fast as predicted, he says.